Snyder: Gas tax, Medicaid plans make fiscal sense

Gov. Rick Snyder's go-to argument in asking lawmakers to back $2.5 billion in new spending for road repairs and health insurance for low-income adults may seem counterintuitive.

Not adding the significant influx of money to the next budget, he says, would actually hurt the state's bottom line.

Get used to these figures as the governor, a former accountant, seeks support from residents and skeptical GOP legislators in coming months:

— $25 billion, the bill Snyder says the state would be stuck with later if it does not spend $1.2 billion more a year on road and bridge maintenance in the next decade.

— 2035, the year he says the state would effectively start owing anything to expand Medicaid to hundreds of thousands of people under the federal health care law. That is because initially, the people who get medical and mental health care from state-funded programs would be covered by federal money. The governor says if the savings are tucked away for future use, Michigan would be off the hook for 21 years.

How effectively Snyder makes his fiscal pitches could determine the fate of the two biggest proposed spending increases in the budget.

It will not be easy because, bottom line, some Democratic and Republican lawmakers would have to stomach voting for higher gas taxes and vehicle registration fees. State gas taxes have not gone up since 1997.

"If we treat this as normal politics, it probably won't get done," he said during a town hall-style event Thursday night in Grand Rapids, the same day he unveiled his budget. His previous call for more road cash went nowhere in 2012, an election year.

Snyder said he has never once heard participants in his town halls say they like their roads. He is asking drivers to pay $120 more per vehicle per year and frames it as a chance to save on vehicle repairs and have safer roads.

Spending $1 to maintain a road in "fair" condition eliminates or delays spending $6-14 later if it becomes a "very poor" road, according to his administration.

Initial reaction in the Capitol has perhaps been less muted than to past road-funding bills. The Senate's Republican leader appointed a new seven-member committee Thursday to review Snyder's proposal, and it includes veterans not eligible for another Senate run in 2014 because of term limits.

Freshman Rep. Michael McCready, a Bloomfield Hills Republican, said he knows new road revenue could be needed.

"I have to think, though, that there's some money in the general fund somewhere we can apply toward that $1.3 billion," he said.

Some outside Lansing voiced outrage with Snyder's plan and said lawmakers should not bow to pressure from the road-building lobby and some business groups to act.

"Instead of looking for new solutions, the governor has chosen the same failed tactics — reaching for taxpayers' wallets," said Denee Rockman-Moon, leader of the state Libertarian Party.

Page 2 of 2 - Medicaid expansion may be more palatable because the federal government would pay all or most of the cost, and Democrats, hospitals, doctors and others strongly support carrying out the health care law championed by President Barack Obama. But conservatives have doubts.

Sen. Patrick Colbeck said he is leery of "getting into bed" with an unstable federal government at a time Michigan's fiscal outlook is sunnier than in the past.

"I don't think it's a done deal that this Affordable Care Act is something that is going to be coming into place," he said, questioning the Obama administration's ability to set up another key piece of the law — an online marketplace in Michigan where people can shop for health insurance.

The GOP-led state House last year rejected Snyder's call to create a state-run exchange, so the state is now headed toward a partnership exchange controlled primarily by the federal government. Michigan last month was given a $31 million federal grant to help implement the exchange, but that, too, could run into resistance when Snyder soon seeks permission from legislators to spend it.

The governor has his work cut out for him.

"Let's be making investments — not just quote-unquote 'spending' but investing where there's a positive outcome that clearly has more value to all 10 million Michiganders than not making that investment," he said.